msci fourth quarter and full-year 2018

© 2019 MSCI Inc. All rights reserved. Please refer to the disclaimer at the end of this document.

MSCI FOURTH QUARTER AND FULL-YEAR 2018Earnings Presentation

January 31, 2019

FORWARD – LOOKING STATEMENTS

2

• This earnings presentation contains forward-lookingstatements within the meaning of the Private SecuritiesLitigation Reform Act of 1995, including withoutlimitation, our full-year 2019 guidance. These forward-looking statements relate to future events or to futurefinancial performance and involve known and unknownrisks, uncertainties and other factors that may cause ouractual results, levels of activity, performance orachievements to be materially different from any futureresults, levels of activity, performance or achievementsexpressed or implied by these statements. In some cases,you can identify forward-looking statements by the use ofwords such as “may,” “could,” “expect,” “intend,” “plan,”“seek,” “anticipate,” “believe,” “estimate,” “predict,”“potential” or “continue,” or the negative of these termsor other comparable terminology. You should not placeundue reliance on forward-looking statements becausethey involve known and unknown risks, uncertainties andother factors that are, in some cases, beyond our controland that could materially affect our actual results, levelsof activity, performance or achievements.

• Other factors that could materially affect actual results,levels of activity, performance or achievements can befound in MSCI’s Annual Report on Form 10-K for the fiscalyear ended December 31, 2017 filed with the Securitiesand Exchange Commission (“SEC”) on February 26, 2018and in quarterly reports on Form 10-Q and current reportson Form 8-K filed or furnished with the SEC (herein,referred to as “Public Filings”). If any of these risks oruncertainties materialize, or if our underlying assumptionsprove to be incorrect, actual results may vary significantlyfrom what MSCI projected. Any forward-lookingstatement in this earnings presentation reflects MSCI’scurrent views with respect to future events and is subjectto these and other risks, uncertainties and assumptionsrelating to MSCI’s operations, results of operations,growth strategy and liquidity. MSCI assumes no obligationto publicly update or revise these forward-lookingstatements for any reason, whether as a result of newinformation, future events, or otherwise, except asrequired by law.

OTHER INFORMATION

3

• Percentage changes and totals in this earningspresentation may not sum due to rounding.

• Percentage changes refer to the comparable period in2017, unless otherwise noted.

• Gross sales include both recurring subscription and non-recurring sales as reported in Table 6: Sales and RetentionRate by Segment (unaudited) of the press releasereporting MSCI’s financial results for fourth quarter andfull-year 2018.

• Foreign currency exchange rate fluctuations reflect thedifference between the current period results as reportedcompared to the current period results recalculated usingthe foreign currency exchange rates in effect for thecomparable prior period. While operating revenuesadjusted for the impact of foreign currency fluctuationsincludes asset-based fees that have been adjusted for theimpact of foreign currency fluctuations, the underlyingAUM, which is the primary component of asset-basedfees, is not adjusted for foreign currency fluctuations.Approximately two-thirds of the AUM are invested insecurities denominated in currencies other than the U.S.dollar, and accordingly, any such impact is excluded fromthe disclosed foreign currency adjusted variances.

Subscription Run Rate GrowthReported / Organic

Q4’18 – FINANCIAL RESULTS1

4

Exceptional Revenue Growth

Revenue Growth(Recurring & Asset-Based Fees)

Consistent Strategy and Execution

1Percentage and other changes refer to Q4 2017 unless otherwise noted.

Adjusted EPS

+14%

Diluted EPS

+143%

Outstanding EPS Growth

Continued Operational Efficiency

Capital Optimization

+7% / +10%+8%(9% & 4%)

Adj. EBITDA Margin (Change in bps) / Operating Margin (Change in bps)

Adj. EBITDA Growth / Operating Income Growth

52.5% (+55 bps) /47.0% (+91 bps) +9% / +10%

Effective Tax Rate / (YoY Reduction)

18.8%(3,035 bps)

Share Repurchases (Q4 & Q1’19 QTD)

$754.5 million5.1 million shares

Avg. Price: $147.71

Tax

HIGH SUBSCRIPTION RUN RATE GROWTH

5

Index Analytics All Other

$367.9$403.1

$32.5

$50.6

$502.7

Q4’17

$59.1

$40.5

Q4 ’18

$451.0

+11.4%

$295.5

$64.0

$129.9

$40.0

Q4 ’17

$314.6

$137.3

Q4 ’18

$491.9$489.5

+0.5%

Q4 ’18

$45.4

$64.6$79.5

Q4 ’17

$43.8

$124.9

$108.4

+15.2%

+11.4%Organic

+6.5%Organic

+18.6%Organic

+24.5%

+16.8%

+9.6%

(37.6%)

+5.7%

+6.5%

+3.7%

+23.0%

Momentum Across All Client Segments

Best-In-Class Solutions1

Driving GrowthIntegrating ESG Across Entire

Investment Process

Factor & ESG

Custom & Specialized

Market Cap Weighted

Other

Equity

Multi-Asset Class

Real Estate

ESG

(US$ in millions)

1Solutions refers to the usage of our products and / or services by our clients to help them achieve their specific investment objectives.

Q4’18 FINANCIAL SUMMARY

6

Operating Revenue Operating Expenses Operating Income Earnings Per Share Cash Generation

= Depreciation and Amortization = Depreciation and Amortization = Reflects the per diluted share addback/reduction of items consistent with our definition of adjusted EPS as defined on slide 28.

= Capex

Adj. EBITDA MarginOperating Margin

Strong & Consistent Execution Driving Results Across All Metrics

(US$ in millions)

= Recurring + Non-Recurring Revenue

= Asset-Based Fees Revenue

$256.3 $280.3

$78.5

$81.4

$334.8

$361.7

Q4'17 Q4'18

+8.0%+8.2% ex FX

+10.3% ex FX

ex divestitures1

$161.0 $171.9

$180.6

$191.9

Q4'17 Q4'18

Operating Expenses+6.2%

+8.1% ex FX

Adj. EBITDA Expenses+6.8%

+8.8% ex FX

$154.1 $169.8

$173.8

$189.8

51.9% 52.5%

46.0% 47.0%

Q4'17 Q4'18

Adj. EBITDA+9.2%

+7.6% ex FX

Operating Income+10.2%

+8.3% ex FX

$0.70

$1.70

$1.15

$1.31

Q4'17 Q4'18

Adj. EPS+13.9%

Diluted EPS+142.9%

$122.6

$150.4

$143.2

$173.2

Q4'17 Q4'18

Cash from Operations+21.0%

Free Cash Flow+22.7%

1ex divestitures refers to excluding the impact of the divestitures of Financial Engineering Associates, Inc. (“FEA”) and Investor Force Holdings, Inc. (“InvestorForce”)

ADJUSTED EPS GROWTH

7Investments Paying Off; Driving High Quality Earnings Growth

$1.15 $1.31

$0.21

$0.03 ($0.13)

$0.04 ($0.02) $0.01 $0.02

Q4'17 Adj. EPS Higher Revenue (Investment) /Efficiency

Lower Share Count Net Interest Effective Tax Rate FX / Other Q4'18 Adj. EPS

Recurring + Non-Recurring Revenue Asset-Based Fees Revenue

+13.9%+$0.24 ($0.13) +$0.02 +$0.03

Business Growth68.8%

Tax Benefits6.2%

FX / Other12.5%

% of Total:

Capital Activities12.5%

SEGMENT RESULTS

30.1%Margin

+358 bpsYoY

71.2%Margin

(240) bpsYoY

10.8%Margin

+1,086 bpsYoY

Q4’18 SEGMENT RESULTS

9Strong Operating Momentum Across All Segments

Index Analytics

All Other Q4 Drivers

Q4’18

$3.8

$78.5

$111.5

$81.4

$5.5

Q4’17

$123.5

$193.8$210.4

+8.6%

Recurring Non Recurring ABF

+8.6%ex FX

Revenue Adjusted EBITDA

Q4’18Q4’17

$149.9$142.7

+5.1%

Adjusted EBITDA



Q4’18

$115.3 $119.7

$2.2$2.2

Q4’17

$117.5 $121.9

+3.8%

Recurring Non Recurring

+9.7%ex FX, ex

divestitures

Q4’17

$36.7

Q4’18

$31.1

+17.8%

Adjusted EBITDA

Q4’18

$22.2

$1.3

$0.9

Q4’17

$23.5

$28.4

$29.3+24.8%

Recurring Non Recurring

+26.7%ex FX

Q4’18

$3.2

($0.0)

Q4’17

NM

Adjusted EBITDA

• Demand across all client segments remains robust, driving strong recurring subscription revenue growth

• ABF revenue growth moderating due to lower AUM

• Continue executing strategy while maintaining disciplined approach to investments

(US$ in millions)

3.8%ex FX

$51.6 $48.0

$18.0 $21.0

$25.2 $19.4

$8.4 $7.6

Q4'17 Q4'18 Q4'17 Q4'18 Q4'17 Q4'18 Q4'17 Q4'18

MSCI Index Analytics All Other

(6.9%) +16.9% (22.9%) (9.5%)

$1,365.7 $1,431.3

$767.9 $814.6

$489.5 $491.9

$108.4 $124.9

Q4'17 Q4'18 Q4'17 Q4'18 Q4'17 Q4'18 Q4'17 Q4'18


+4.8% +6.1% +0.5% +15.2%

+10.0% +11.4% +6.5% +18.6%

Q4 OPERATING METRICS

102nd Highest Recurring Net New Sales Quarter; Healthy Demand Across Segments

(US$ in millions)

YoY Run Rate Growth

YoY Recurring Net New Sales Growth

$31.8 $29.9

$11.8 $13.3 $13.5 $10.9

$6.4 $5.6

Q4'17 Q4'18 Q4'17 Q4'18 Q4'17 Q4'18 Q4'17 Q4'18


(6.0%) +12.8% (19.4%) (12.4%)

Total RR1

(Reported)

Sub. RR1

(organic)

YoY Recurring Sales Growth

1Sub.: Subscription; RR: Run Rate.

$316.8 $311.9ABF RR

ABF RR

$316.8 $311.9

$135 $147 $161 $170

$20 $33

$47 $56

$156

$179

$208 $226

Q4'15 Q4'16 Q4'17 Q4'18

Factor Analytics Factor Indexes ex V/G

3 YearCAGR %

13%

40%

8%

INTEGRATED FACTOR AND ESG RUN RATE TRENDS

11Driving Common Language Across Investment Universe

Factor Index and Analytics Run Rate Growth1 ESG Content and ESG Index Run Rate Growth2

(US$ in millions)

1Factor Index Run Rate includes Factor related Index subscription and asset-based fees Run Rate, and Factor Analytics Run Rate includes Factor module Run Rate in the Analytics segment.2ESG Content includes ESG segment Run Rate, and ESG Index includes ESG related Index subscription and asset-based fees Run Rate.3V/G: Traditional value and growth product Run Rate for Indexes.

3

$40 $49

$65 $79

$8

$12

$19

$27

$48

$61

$83

$107

Q4'15 Q4'16 Q4'17 Q4'18

ESG Content ESG Indexes

3 YearCAGR %

30%

50%

25%

INDEX SEGMENT – ASSET-BASED FEES DETAIL

12Favorable Mix Driving Sequential Increase in Avg. BPS

ABF Revenue

$3.6

$54.2

$5.1

$23.2$20.6

Q3’18 Q4’18Q4’17

$55.0

$3.8

$52.1

$81.4

$24.2

$78.5$82.0

+3.8%

+41.4%

+17.4%

(4.0%)

Quarterly Avg. AUM and Avg. BPS1 of ETFs Linked to MSCI Indexes

3.04

3.02 2.96 2.90 2.92

$712.3$755.8$776.5

Q4’17 Q1’18 Q2’18 Q3’18

$717.1

Q4’18

$779.5

Average AUM

Average BPS

Quarter-End AUM by Market Exposure2 of ETFs Linked to

MSCI Indexes

$146.0 $170.4

$379.1

Q4’17

$219.2

$378.0

$217.1

Q3’18

$328.8

$695.6

$219.0

$147.7

Q4’18

$744.3$765.5

(6.6%)

+1.1%

(0.1%)

(13.2%)

YoY YoY

Futures and Options

Non-ETF

ETF

US

EM

DM ex US

(US$ in millions, except AUM in billions and Average BPS)

1Average BPS based on Run Rate and period–end AUM in ETFs linked to MSCI Indexes.2US = ETFs linked to MSCI indexes, the majority of whose weight is comprised of securities in MSCI Developed Market (DM) countries, primarily or exclusively in the US.DM ex US = ETFs linked to MSCI indexes, the majority of whose weight is comprised of securities in MSCI DM countries other than the US.EM = ETFs linked to MSCI indexes, the majority of whose weight is comprised of securities that are not in MSCI DM countries.Prior periods have been reclassified to conform to the current period classification.Note: The AUM in ETFs also include AUM in Exchange Traded Notes, the value of which is less than 1.0% of the AUM amounts presented.

Q4 & FY’18 AUM DRIVERS: MSCI-LINKED EQUITY ETFS

Q4’18 Sequential Change in AUM

Flows Returning To Emerging Markets

$3.6

$21.4

($0.3)

Q3’18 Ending AUM US Developed Markets ex US

$765.5

Emerging Markets

($22.4)

($52.8)

($19.5)

Market Change Q4’18 Ending AUM

$695.6

U.S.

EM

DM ex. U.S.

FY’18 Change in AUM

$13.8

$37.7

Q4’17 Ending AUM US

$10.0

Developed Markets ex US

Emerging Markets

($12.2)

($60.2)

($37.9)

Market Change

$744.3

Q4’18 Ending AUM

$695.6

13

U.S.

DM ex U.S.

EM

(US$ in billions)

Cash inflows / (outflows)

Cash inflows / (outflows)

($110.3) Total

($94.8) Total

CAPITAL, LIQUIDITY AND GUIDANCE

CAPITAL AND LIQUIDITY

15Consistent Capital Allocation Strategy

(US$ in millions)

1Excludes deferred financing fees of $24.5 million as of December 31, 2018.

Continued Capital DisciplineCapital Position (As of 12/31/18)

• Repurchased $925.0 million of shares at average price of $148.34 as of December 31, 2018, year-to-date.

• $0.8 billion remains under board authorization as of December 31, 2018.

Return of Capital

Excess Cash

• Strong balance sheet provides optionality

• Disciplined and consistent approach to deployment

Total Cash $904

Total Debt1 $2,600

Net Debt1 $1,696

Total Debt / Adj. EBITDA 3.4x

Net Debt / Adj. EBITDA 2.2x

FULL YEAR 2019 GUIDANCE

16

(US$ in millions)

Strong Pipeline of High Return Projects; Continue to Monitor Markets

2018 Actual 2019 Guidance YoY Variance

Operating Expenses $747 $772 to $800 3% to 7%

Adjusted EBITDA Expenses1 $662 $685 to $705 3% to 6%

Interest Expense $133 $144 $11

Effective Tax Rate2 19.4% 11.5% - 14.5% (7.9%) to (4.9%)

Net Cash Provided by Operating Activities

$613 $600 to $630 ($13) to $17

Capex ($49) ($55) to ($45) ($6) to $4

Free Cash Flow $564 $545 to $585 ($19) to $21

1Excludes the estimated payroll tax impact from the vesting in the three months ending March 31, 2019 of the multi-year PSU awards granted to executives in 2016 (the “Multi-Year PSUs”).2Includes the estimated income tax windfall benefit related to the vesting of the Multi-Year PSUs which is expected to reduce the 2019 effective tax rate by 8.5 to 9.5 percentage points.

APPENDIX

Subscription Run Rate GrowthReported / Organic

FY’18 – FINANCIAL RESULTS1

18

Exceptional Revenue Growth

Revenue Growth (Recurring & Asset-Based Fees)

Consistent Strategy and Execution

1Percentage and other changes refer to FY 2017 unless otherwise noted.

Adjusted EPS

+34%

Diluted EPS

+71%

Outstanding EPS Growth

Continued Operational Efficiency

+7% / +10%+13%

(10% & 22%)

Adj. EBITDA Margin (Change in bps) / Operating Margin (Change in bps)

Adj. EBITDA Growth / Operating Income Growth

53.9% (+209 bps) /47.9% (+240 bps) +17% / +18%

Effective Tax Rate / (YoY Reduction)

19.4%(1,553 bps)

Share Repurchases (FY 2018)

$925.0 million6.2 million shares

Avg. Price: $148.34

Capital OptimizationTax

FY’18 FINANCIAL SUMMARY

19

Operating Revenue Operating Expenses Operating Income Earnings Per Share Cash Generation

= Depreciation and Amortization = Depreciation and Amortization = Reflects the per diluted share addback/reduction of items consistent with our definition of adjusted EPS as defined on slide 28.

= Capex

Adj. EBITDA MarginOperating Margin

Strong Year and Well-Positioned for 2019

(US$ in millions)

= Asset-Based Fees Revenue

= Recurring + Non-Recurring Revenue

$998.1 $1,097.4

$276.1

$336.6 $1,274.2

$1,434.0

FY'17 FY'18

+12.5%+12.4% ex FX+13.3% ex FX

ex divestitures

$614.4 $661.6

$694.4

$747.1

FY'17 FY'18

Operating Expenses+7.6%

+7.3% ex FX

Adj. EBITDA Expenses+7.7%

+7.4% ex FX

$579.8 $686.9

$659.8

$772.4

51.8%

53.9%

45.5%

47.9%

FY'17 FY'18

Adj. EBITDA+17.1%

+17.0% ex FX

Operating Income+18.5%

+18.4% ex FX

$3.31

$5.66

$3.98

$5.35

FY'17 FY'18

Adj. EPS+34.4%

Diluted EPS+71.0%

$355.3

$563.8

$404.2

$612.8

FY'17 FY'18

Cash from Operations+51.6%

Free Cash Flow+58.7%

$148.0 $163.8

$61.3 $72.7

$64.2 $65.0

$22.5 $26.2

FY'17 FY'18 FY'17 FY'18 FY'17 FY'18 FY'17 FY'18


+10.7% +18.5% +1.3% +16.2%

$1,365.7 $1,431.3

$767.9 $814.6

$489.5 $491.9

$108.4 $124.9

Q4'17 Q4'18 Q4'17 Q4'18 Q4'17 Q4'18 Q4'17 Q4'18


+4.8% +6.1% +0.5% +15.2%

+10.0% +11.4% +6.5% +18.6%

STRONG 2018 OPERATING METRICS

20Recurring Subscription Run Rate Continues To Deliver Robust Growth

(US$ in millions)

YoY Run Rate Growth

YoY Recurring Net New Sales Growth

Total RR1

(Reported)

Sub. RR1

(organic)

YoY Recurring Sales Growth

1Sub.: Subscription; RR: Run Rate.

$89.6

$102.9

$44.3 $51.8

$30.5 $31.3

$14.8 $19.8

FY'17 FY'18 FY'17 FY'18 FY'17 FY'18 FY'17 FY'18


+14.8% +17.0% +2.7% +33.4%

$316.8 $311.9ABF RR

ABF RR

$316.8 $311.9

Q1’13 – Q4’18 YOY RUN RATE GROWTH TREND

21

YoY Run Rate Growth as Reported

YoY Subscription Run Rate Growth as Reported vs. Organic Growth

10% 11%

12%7% 8% 8% 8% 7% 6% 6% 6% 7%

9%7%

7% 7% 6% 7% 9% 11% 11% 9% 9%

7%

(2%)2%

28%25%

21%

34%

21%

10%

18%14%

6%

15%

5%(3%)

13%8%

21%

38% 37%

46%

38%

21%

13%

-2%

8%9%

14% 10% 10% 12% 10%

8%8% 8%

6%8%

8% 5%8%

7%

9%13% 14%

17% 16%12%

10%5%

Q1'13 Q2'13 Q3'13 Q4'13 Q1'14 Q2'14 Q3'14 Q4'14 Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18

Subscription Total Asset-Based Fees MSCI Total

10% 11%12%

7% 8% 8%

8% 7%6% 6% 6% 7%

9%

7% 7% 7% 6%7%

9%

11% 11%

9% 9%

7%

4% 4% 5%6% 7% 7%

8% 8% 8% 8% 8% 8%

8%

8% 7% 8% 7% 8%

9%10% 10%

10% 10%10%


Subscription Run Rate Growth as Reported Organic Subscription Run Rate Growth

Q1’13 – Q4’18 YOY SEGMENT RUN RATE GROWTH TREND

22

Index

Analytics

All Other

13%18% 21% 24% 19%

12% 13%4% 4%

11%5% 5% 7% 5% 12%

17%23% 25% 20%

19%15%

12% 13% 13% 15% 15%

14% 14%11% 10% 12% 10% 11%

15% 13% 14%

14%17% 18% 19%

21%19%



1%2%

4%5% 4% 4%

3% 3% 2% 2% 3%5%

7%6% 5%

3% 2%4%

5%

8% 8%

5% 5%0.5%

0.1% 1% 2%3% 4% 4%

4% 5% 6% 6% 5% 6%

6%5% 4%

4% 3% 4%6%

7% 7%

7% 7%7%



9% 8% 8% 9% 10% 11% 10%

10% 10% 10%

11%

10%

10% 10%

10%

10%

10%

10% 11% 11% 11%

12% 11%

11%

(2%) 2%

28% 25% 21%

34%21%

10%18% 14%

6%

15%

5% (3%)

13%

8%

21%

38% 37%46%

38%

21%13%

-2%Q1'13 Q2'13 Q3'13 Q4'13 Q1'14 Q2'14 Q3'14 Q4'14 Q1'15 Q2'15 Q3'15 Q4'15 Q1'16 Q2'16 Q3'16 Q4'16 Q1'17 Q2'17 Q3'17 Q4'17 Q1'18 Q2'18 Q3'18 Q4'18

Subscription Run Rate Growth as Reported ABF Run Rate Growth as Reported

RECONCILIATION OF ADJUSTED EBITDA TO NET INCOME

23

1As a result of the adoption of recent accounting guidance, the Company has restated its adjusted EBITDA by excluding $0.2 million and $0.6 million of non-service related pension costs from adjusted EBITDA expenses for the three

months and full-year ended December 31, 2017, respectively.

Dec. 31, Dec. 31, Sep. 30, Dec. 31, Dec. 31,

In thousands 2018 2017(1) 2018 2018 2017(1)

Index adjusted EBITDA 149,930$ 142,702$ 154,477$ 607,853$ 522,241$

Analytics adjusted EBITDA 36,679 31,141 37,046 143,645 125,624

All Other adjusted EBITDA 3,153 (26) 4,014 20,935 11,892

Consolidated adjusted EBITDA 189,762 173,817 195,537 772,433 659,757

Amortization of intangible assets 11,633 11,560 11,681 54,189 44,547

Depreciation and amortization of property,

equipment and leasehold improvements 8,311 8,118 7,453 31,346 35,440

Operating income 169,818 154,139 176,403 686,898 579,770

Other expense (income), net (17,471) 27,179 29,557 57,002 112,871

Provision for income taxes 35,157 62,358 23,014 122,011 162,927

Net income 152,132$ 64,602$ 123,832$ 507,885$ 303,972$

Three Months Ended Year Ended

RECONCILIATION OF NET INCOME AND DILUTED EPS TO ADJUSTED NET INCOME AND ADJUSTED EPS

24


In thousands, except per share data 2018 2017 2018 2018 2017

Net income 152,132$ 64,602$ 123,832$ 507,885$ 303,972$

Plus: Amortization of acquired intangible assets 8,746 9,238 8,999 43,981 39,157

Less: Gain on sale of Alacra (not tax-effected) — — — — (771)

Less: Gain on sale of FEA (not tax-effected) — — (10) (10,646) —

Less: Gain on sale of InvestorForce (46,595) — — (46,595) —

Less: Valuation Allowance released related to

InvestorForce disposition — — (7,758) (7,758) —

Less: Tax Reform adjustments (6,671) 34,500 — (8,272) 34,500

Less: Income tax effect 9,390 (1,922) (1,884) 1,678 (10,772)

Adjusted net income 117,002$ 106,418$ 123,179$ 480,273$ 366,086$

Diluted EPS 1.70$ 0.70$ 1.36$ 5.66$ 3.31$

Plus: Amortization of acquired intangible assets 0.10 0.10 0.10 0.49 0.43

Less: Gain on sale of Alacra (not tax-effected) - - - - (0.01)

Less: Gain on sale of FEA (not tax-effected) - - - (0.12) -

Less: Gain on sale of InvestorForce (0.52) - - (0.52) -

Less: Valuation Allowance released related to

InvestorForce disposition - - (0.08) (0.09) -

Plus: Tax Reform adjustments (0.07) 0.37 - (0.09) 0.38

Less: Income tax effect 0.10 (0.02) (0.03) 0.02 (0.13)

Adjusted EPS 1.31$ 1.15$ 1.35$ 5.35$ 3.98$


RECONCILIATION OF ADJUSTED EBITDA EXPENSES TO OPERATING EXPENSES

25

1As a result of the adoption of recent accounting guidance, the Company has restated its adjusted EBITDA by excluding $0.2 million and $0.6 million of non-service related pension costs from adjusted EBITDA expenses for the three

months and full-year ended December 31, 2017, respectively.2We have not provided a line-item reconciliation for adjusted EBITDA expenses to total operating expenses for this future period because we do not provide guidance on the individual reconciling items between total operating

expenses and adjusted EBITDA expenses.

Full-Year

Dec. 31, Dec. 31, Sep. 30, Dec. 31, Dec. 31, 2019

In thousands 2018 2017(1) 2018 2018 2017(1) Outlook(2)

Index adjusted EBITDA expenses 60,503$ 51,072$ 55,717$ 227,622$ 196,718$

Analytics adjusted EBITDA expenses 85,256 86,369 82,852 336,294 332,645

All Other adjusted EBITDA expenses 26,167 23,521 23,828 97,635 85,052

Consolidated adjusted EBITDA expenses 171,926 160,962 162,397 661,551 614,415 $685,000 - $705,000

Payroll taxes from vesting of Multi-Year PSUs - - - - - 12,000 - 15,000

Amortization of intangible assets 11,633 11,560 11,681 54,189 44,547

Depreciation and amortization of property, 75,000 - 80,000

equipment and leasehold improvements 8,311 8,118 7,453 31,346 35,440

Total operating expenses 191,870$ 180,640$ 181,531$ 747,086$ 694,402$ $772,000 - $800,000


RECONCILIATION OF NET CASH PROVIDED BY OPERATING ACTIVITIES TO FREE CASH FLOW

26

1We have not provided a line-item reconciliation for free cash flow to net cash from operating activities for this future period because we do not provide guidance on the individual reconciling items between net cash from operating

activities and free cash flow.

Full-Year

Dec. 31, Dec. 31, Sep. 30, Dec. 31, Dec. 31, 2019

In thousands 2018 2017 2018 2018 2017 Outlook(1)

Net cash provided by operating activities 173,175$ 143,153$ 143,825$ 612,762$ 404,158$ $600,000 - $630,000

Capital expenditures (17,188) (15,736) (8,590) (30,257) (33,177)

Capitalized software development costs (5,589) (4,863) (4,517) (18,704) (15,640)

Capex (22,777) (20,599) (13,107) (48,961) (48,817) (55,000 - 45,000)

Free cash flow 150,398$ 122,554$ 130,718$ 563,801$ 355,341$ $545,000 - $585,000


RECONCILIATION OF EFFECTIVE TAX RATE TO ADJUSTED TAX RATE

27


2018 2017 2018 2018 2017

Effective tax rate 18.77% 49.12% 15.67% 19.37% 34.90%

Tax Reform impact on effective tax rate 3.56% (27.18%) —% 1.31% (7.39%)

Adjusted tax rate 22.33% 21.94% 15.67% 20.68% 27.51%


USE OF NON-GAAP FINANCIAL MEASURES

28

• MSCI has presented supplemental non-GAAP financial measures as part ofthis earnings presentation. Reconciliations are provided in slides 23-27above that reconcile each non-GAAP financial measure with the mostcomparable GAAP measure. The non-GAAP financial measures presentedin this earnings presentation should not be considered as alternativemeasures for the most directly comparable GAAP financial measures. Thenon-GAAP financial measures presented in this earnings presentation areused by management to monitor the financial performance of thebusiness, inform business decision-making and forecast future results.

• “Operating revenues ex-FX and ex-divestitures” is defined as operatingrevenues excluding the impact of foreign currency exchange and theoperating revenues attributable to divested businesses for thecomparable prior year period.

• “Adjusted EBITDA” is defined as net income before (1) provision forincome taxes, (2) other expense (income), net, (3) depreciation andamortization of property, equipment and leasehold improvements, (4)amortization of intangible assets and, at times, (5) certain othertransactions or adjustments.

• “Adjusted EBITDA expenses” is defined as operating expenses lessdepreciation and amortization of property, equipment and leaseholdimprovements and amortization of intangible assets and, at times, certainother transactions or adjustments.

• “Adjusted net income” and “adjusted EPS” are defined as net income anddiluted EPS, respectively, before the after-tax impact of the amortizationof acquired intangible assets, the impact of divestitures, the impact of TaxReform adjustments (except for amounts associated with active taxplanning implemented as a result of Tax Reform) and, at times, certainother transactions or adjustments.

• “Adjusted tax rate” is defined as the effective tax rate excluding theimpact of Tax Reform adjustments (except for amounts associated withactive tax planning implemented as a result of Tax Reform).

• “Capex” is defined as capital expenditures plus capitalized softwaredevelopment costs.

• “Free cash flow” is defined as net cash provided by operating activities,less Capex.

• We believe operating revenues ex-FX and ex-divestitures are meaningfulmeasures of the operating performance of MSCI because they adjust forthe impact of foreign currency exchange and exclude the impact ofoperating revenues attributable to divested businesses for thecomparable prior year period, providing insight to our core operatingperformance for the period(s) presented.

• We believe adjusted EBITDA and adjusted EBITDA expenses aremeaningful measures of the operating performance of MSCI because theyadjust for significant one-time, unusual or non-recurring items as well aseliminate the accounting effects of capital spending and acquisitions thatdo not directly affect what management considers to be our coreoperating performance in the period.

• We believe adjusted net income and adjusted EPS are meaningfulmeasures of the performance of MSCI because they adjust for the after-tax impact of significant one-time, unusual or non-recurring items as wellas eliminate the accounting effects of acquisitions that do not directlyaffect what management considers to be our core performance in theperiod. From time to time, we may present normalized adjusted EBITDAexpense that takes into account one-time discretionary investments andincremental severance, if material or helpful.

• We believe that free cash flow is useful to investors because it relates theoperating cash flow of MSCI to the capital that is spent to continue andimprove business operations, such as investment in MSCI’s existingproducts. Further, free cash flow indicates our ability to strengthenMSCI’s balance sheet, repay our debt obligations, pay cash dividends andrepurchase shares of our common stock.

• We believe that adjusted tax rate is useful to investors because itincreases the comparability of period-to-period results by adjusting forthe estimated net impact of Tax Reform.

• We believe that the non-GAAP financial measures presented in thisearnings presentation facilitate meaningful period-to-period comparisonsand provide a baseline for the evaluation of future results.

• Operating revenues ex-FX and ex-divestitures, adjusted EBITDA expenses,adjusted EBITDA, adjusted net income, adjusted EPS, adjusted tax rate,Capex and free cash flow are not defined in the same manner by allcompanies and may not be comparable to similarly-titled non-GAAPfinancial measures of other companies.

USE OF OPERATING METRICS

29

• MSCI has presented supplemental key operating metrics as part of thisearnings presentation, including Run Rate, subscription sales andcancellations, non-recurring sales and Retention Rate.

• Retention Rate for a period is calculated by annualizing the cancellationsfor which we have received a notice of termination or for which webelieve there is an intention not to renew during the period, and webelieve that such notice or intention evidences the client’s final decisionto terminate or not renew the applicable agreement, even though suchnotice is not effective until a later date. This annualized cancellationfigure is then divided by the subscription Run Rate at the beginning of theyear to calculate a cancellation rate. This cancellation rate is thensubtracted from 100% to derive the annualized Retention Rate for theperiod. Retention Rate is computed by segment on a product/service-by-product/service basis. In general, if a client reduces the number ofproducts or services to which it subscribes within a segment, or switchesbetween products or services within a segment, we treat it as acancellation for reporting purposes, except in the case of a product orservice switch that management considers to be a replacement productor service. In those replacement cases, only the net change to the clientsubscription, if a decrease, is reported as a cancel. In the Analytics andthe ESG segments, substantially all product or service switches aretreated as replacement products or services and netted in this manner,while in our Index and Real Estate segments, product or service switchesthat are treated as replacement products or services and receive nettingtreatment occur only in certain limited instances. In addition, we treatany reduction in fees resulting from a down-sale of the same product orservice as a cancellation to the extent of the reduction. This definition ofRetention Rate was revised and was previously provided beginning withour earnings release, dated August 2, 2018, to describe our methodologyfor calculating cancellations. We believe this methodology has beenapplied in all material respects in calculating cancellation rates reportedin the prior periods covered in our Form 10-K for the year endedDecember 31, 2017 and in our Form 10-Q for the quarters ended March

31, 2018, June 30, 2018, and September 30, 2018, and accordingly, we donot believe changes to those previously reported cancellation rates arerequired. Beginning in second quarter 2018, “Aggregate Retention Rate”is referred to as “Retention Rate.”

• Run Rate estimates at a particular point in time the annualized value ofthe recurring revenues under our client license agreements (“ClientContracts”) for the next 12 months, assuming all Client Contracts thatcome up for renewal are renewed and assuming then-current currencyexchange rates, subject to the adjustments and exclusions describedelsewhere in our Public Filings. For any Client Contract where fees arelinked to an investment product’s assets or trading volume/fees, the RunRate calculation reflects, for ETFs, the market value on the last tradingday of the period, for futures and options, the most recent quarterlyvolumes, and/or reported exchange fees, and for other non-ETF products,the most recent client reported assets. Run Rate does not include feesassociated with “one-time” and other non-recurring transactions. Inaddition, we add to Run Rate the annualized fee value of recurring newsales, whether to existing or new clients, when we execute ClientContracts, even though the license start date, and associated revenuerecognition, may not be effective until a later date. We remove from RunRate the annualized fee value associated with products or services underany Client Contract with respect to which we have received a notice oftermination or non-renewal during the period and have determined thatsuch notice evidences the client’s final decision to terminate or not renewthe applicable products or services, even though such notice is noteffective until a later date.

• “Organic subscription Run Rate growth” is defined as the period overperiod Run Rate growth, excluding the impact of changes in foreigncurrency and the first year impact of any acquisitions. It is also adjustedfor divestitures. Changes in foreign currency are calculated by applyingthe currency exchange rate from the comparable prior period to currentperiod foreign currency denominated Run Rate.

msci fourth quarter and full-year 2018

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